Smartphone sales in the first quarter of 2010 grew by nearly 49% compared with the first quarter a year ago, the biggest year-on-year increase since 2006, a recent study reported. That rate of growth put smartphones at 17.3% of all mobile phones sold in the first quarter (54.3 million out of 314.6 million) up from 13.6% in the first quarter of 2009. This proliferation of new generation smart phones, such as Apple's iPhone, has led to many new developments in fields that can benefit from the power and proliferation of these devices. One such field is the retail market, and in particular methods of payment for services and merchandise using these smart phones.
There have been many attempts to capitalize on this concept by introducing the concept of an electronic credit card that can be implemented with a smart phone. For example, using the phone a consumer can present the phone to a merchant at a point of purchase, and display a bar code or other identifier that can be used by the merchant to debit the customer's account. For example, Labrou et al., U.S. Patent Publication. 2007/0022058, discloses a mobile device such as a phone or PDA that can be used to conduct a point of sale (POS) transaction using a wireless network. Labrou discusses the use of barcode generated by the mobile phone and read by the merchant to authorize payment. Guest et al., U.S. Patent Publication. 2009/0222353, discloses a mobile credit device where the display of the mobile telephone is used to display an image including a barcode which graphically represents transaction data. This includes data identifying a transaction data base records in a transaction database, the transaction database records including data identifying the mobile radio apparatus account. The system is used for an electronic payment device using a phone or PDA, where an image or barcode is generated and read by the merchant to confirm a transaction. Steinberg, U.S. Patent Publication. 2009/0222459, discloses a method, system, apparatus and computer code to consolidate one or more pieces of information onto an electronic device for later conveyance via wireless transmission, display in human readable form, and/or display in computer readable form. The invention seeks to consolidate multiple credit cards, membership cards, tickets, coupons, and other items which can all be represented electronically on a single device. Other disclosures include that of U.S. Patent Publication. 2009/0261166 to Lawson et al., U.S. Patent Publication. 2009/0299834 to Wilson, U.S. Patent Publication. 2009/0156180 to Slavin et al., U.S. Patent Publication. 2010/0063872 to Patel et al., and U.S. Patent Publication. 2010/0070364 to Dugan. Applicant hereby incorporates by reference each and every disclosure of the references above in their entirety into the present application.
While the above disclosures have shown that there is a need for electronic credit cards and the convenience they provide, not enough attention has been applied to the concept of security and fraud protection. In today's increasingly electronic society and with the rapid advances of electronic commerce on the Internet, the use of credit cards for purchases has become convenient and necessary. Credit card transactions have become the de facto standard for Internet and Webbased e-commerce. However, the growing number of credit card transactions provides more opportunity for thieves to steal credit card numbers and subsequently commit fraud. When banks lose money because of credit card fraud, cardholders pay for all of that loss through higher interest rates, higher fees, and reduced benefits. Hence, it is in both the banks' and the cardholders' interest to reduce illegitimate use of credit cards by early fraud detection. The use of electronic credit cards present a new opportunity to address this aspect of credit card purchases.